Call it “sustainable and responsible investing” or “SRI” or “ESG investing” or “impact investing” – whatever your preferred nomenclature, “sustainable investing” in the U.S.A. is making great strides as demonstrated in a new report from US SIF.

The benchmark report issued today – “The Report on US Sustainable, Responsible and Impact Investing Trends 2018” – by the U.S. Forum for Sustainable and Responsible Investment (US SIF) puts things in perspective for investors and corporate managers:

At the beginning of 2018, the institutional owners and asset management firms surveyed reported total sustainable investment at US$12 trillion AUM – that is 26% of the total assets under professional management in the U.S.A. — $1-in-$4 of all investable assets!

That’s an increase of 38% since the last US SIF report at the start of 2016. The AUM of sustainable investments then was $8.72 trillion. That was $1-in-$5.

And that was an increase of 33% since the survey of owners and managers at the start of 2014.

Sustainable investing jumped following the 2008 financial crisis, with growth of 240% from 2012 to 2014.

The US SIF bi-annual survey of investors began in 1995, when the total of sustainable investments professionally managed was pegged at $639 billion. There has been an 18-fold increase in sustainable investing assets since then – at a compound rate of 13.6% over the years since that pioneering research was done.

The researchers queried these institutions in 2018:

496 institutional owners (fiduciaries such as public employee pension funds and labor funds – these represented the component of the survey results at $5.6 trillion in ESG assets**).

Asset managers identified these issues as among the most important of rising concerns:

Climate change and Carbon

Conflict risk

Prominent concerns for asset owners included:

Transparency and Corruption

Civilian firearms / weapons

a range of diversity and equal employment opportunity issues.

The Proxy Voting Arena

The shareowners and asset managers surveyed regularly engage with corporate executives to express their concerns and advocate for change in corporate strategies, practices and behaviors through presentation of resolutions for the entire shareholder base to vote on in the annual corporate elections.

From 2016 to 2018 proxy seasons these resolutions were focused on:

Proxy access for shareowners (business associations have been lobbying to restrict such access by qualified shareowners).

Corporate Political Activity (political contributions, lobbying direct expenses and expenses for indirect lobbying by business groups with allocated corporate contributions).

A range of environmental and climate change issues.

Labor issues / equal employment opportunity.

Executive compensation.

Human Rights.

Call for independent board chair.

Board Diversity.

Call for sustainability reporting by the company.

Public employee pension systems/funds led the campaigns with 71% of the resolutions filed in 2016, 2017 and 2018.

Labor funds accounted for 13% of filings.

Asset/money management firms accounted for 11.5%.

A total of 165 institutional owners and 54 asset managers filed or co-filed resolutions on ESG issues at the beginning of the 2018 proxy voting season.

The ESG Checklist

The institutions and asset managers queried could answer queries that addressed these ESG, community, product factors in describing their investment analysis, decision-making and portfolio construction activities. This is a good checklist for you when discussing ESG issues and topics with colleagues:

The report was funded by the US SIF Foundation to advance the mission of US SIF.

The mission: rapidly shift investment practices towards sustainability, focusing on long-term investment and the generation of positive social and environmental impacts. Both the foundation and US SIF seek to ensure that E, S and G impacts are meaningfully assessed in all investment decisions to result in a more sustainable and equitable society.

The bold name asset owners and asset managers and related firms that are members of US SIF include Bank of America, AFL-CIO Office of Investment, MSCI, Morgan Stanley, TIAA-CREF, BlackRock, UBS Global Asset Management, Rockefeller & Co, Bloomberg,ISS, and Morningstar.

About the US SIF Report: The report project was coordinated by Meg Voorhees, Director of Research, and Joshua Humphreys, Croatan Institute. Lisa Woll is CEO of US SIF. The report was released at Bloomberg LP HQs in New York City; the host was Curtis Ravenel, Global Head of Sustainable Business & Finance at Bloomberg. q1

Governance & Accountability Institute is a long-time member. EVP Louis D. Coppola is the Chair of the US SIF Company Calls Committee (CCC) which serves as a resource to companies by providing a point of contact into the sustainable investment analyst community

For more than 35 years, the Interfaith Center on Corporate Responsibility (ICCR) has been in the forefront of pressing for changes and reforms in corporate policies, practices and behaviors. This is a coalition of 300 institutional investment organizations — mainly faith-based and “values-driven” institutions — directly managing US$100 billion in assets.

ICCR through its long0-term activism and corporate engagement — especially in proxy season and importantly, year-round — influences many billions of dollars more in AUM in the US and global capital markets.

Issues on focus for ICCR members in 2014 included:

Corporate Governance — a traditional/perennial set of concerns; this includes separation and chair and CEO positions, and independence of board members;

Food – access to nutritious food, ag & land use, use of antibiotics in meat animals, food & sustainability…and more; note that for ICCR, food issues include the impact of climate change on growing areas (such as flooding and droughts);

Global Health – access to medicines by people in less-developed economies is a long-standing concern of members, who over the decades have engaged with pharma companies change marketing practices;

Human Rights — increasingly in recent years the focus on corporate supply chain behaviors, policies, and actions has increased;

Water – this ties in to human rights and access to water is a key factor; also, the trend to privatization of water supply is an important focus;

Financial Services – responsible lending was in focus long before the major banks took on too much risk and led the nation into crisis with subprime lending shenanigans; as investors, ICCR members are focused on “risk” as much and perhaps more than many mainstream institutions.

Big issues for ICCR members in recent years includes the focus on corporate political spending (lobbying, contributions); and, strategies / policies / actions / disclosures (and especially lack thereof) on the part of companies in member investment portfolios.

Says the coalition: “ICCR members advocate for greater transparency around how company resources are used to impact elections, regulations and public policy.”

ICCR through member organizations engages with corporate boards and managements to discuss issues of importance to members, who operate in “a multi-stakeholder collaboration.” Typically, brand names among public companies are the enterprises engaged for discussion. Changes made at the brand names will eventually affect (and result in change) for more companies in the industry or sector or geography.

At G&A Institute we have long had a collaborative relationship with ICCR and see [ICCR] actions as important sustainable investment leadership positioning by key institutional and individual investors on ESG issues — especially in the annual corporate proxy voting seasons.